Thursday, January 15, 2015

Egypt surprises markets by cutting rate 50 bps

Egypt's central bank cut its benchmark deposit rate by 50 basis points to 8.75 percent, along with its other policy rates, surprising most economists who had expected the bank to maintain rates after the inflation rate ticked up in December.
The Central Bank of Egypt (CBE), which raised its rate by 100 basis points in July 2014 to curb inflation after prices rose from the government's cut in fuel subsidies, said it would issue a statement from its Monetary Policy Committee shortly.
The rate cut puts the CBE's overnight lending rate at 9.75 percent, the rate on its main operation at 9.25 percent and the discount rate at 9.25 percent.
Egypt's consumer prices rose by 10.13 percent in December from 9.1 percent in November.
In July the inflation rate jumped to 11.04 percent from 8.2 percent and remained above 11 percent through October until November when the decline in inflation triggered expectations that the CBE would consider cutting rates.
But the increase in December inflation put expectations for a rate cut to rest.